ManpowerGroup Earnings: Margins Shrink

ManpowerGroup (NYSE:MAN) reported its results for the fourth quarter. Manpower is in the employment services industry whose five brands are Manpower, Manpower Professional, Elan, Jefferson Wells, and Right Management. The company provides a range of services for the entire employment and business cycle.

Results: Reported a profit of $63.6 million (78 cents per diluted share) in the quarter. ManpowerGroup had a net loss of $350.4 million or a loss $4.29 per share in the year earlier quarter.

Revenue: Rose 5.3% to $5.48 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MAN fell short of the mean analyst estimate of 87 cents per share. Analysts were expecting revenue of $5.57 billion.

Quoting Management: “We had a strong fourth quarter performance,” Jeffrey A. Joerres, ManpowerGroup Chairman and CEO, said. “The team executed well both operationally and strategically – we were able to achieve a 29% increase in underlying operating profit for the fourth quarter and 61% for the year, while substantially moving forward our strategic drivers.”

Key Stats:

Gross margin shrank 0.3 percentage point to 17.1%. The contraction appeared to be driven by increased costs, which rose 5.7% from the year earlier quarter while revenue rose 5.3%.

Revenue has risen the past four quarters. Revenue increased 16.3% to $5.78 billion in the third quarter. The figure rose 23.6% in the second quarter from the year earlier and climbed 23.7% in the first quarter from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the third quarter, it topped the mark by 2 cents, and in the second quarter, it was ahead by 8 cents.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 51 cents a share to 41 cents over the last ninety days. The average estimate for the fiscal year is now $3.13 per share, down from $3.17 sixty days ago.